Rate Refi

To Refi Or Not To Refi?

Rate Refi

Lowering your interest rate can save you thousands of dollars over the life of the loan. Make sure to set clear short-term and long-term goals before moving forward.

Why do you want to refinance? Lowering your payment is typically the goal, and while attractive – that typically means starting over on another 30-year mortgage. That may makes sense for some, as can be in the case of debt-consolidation. But that is not always true either, and you’ll want to consider your specific situation.

Lowering the interest rate on your loan also means less of a tax deduction for interest paid on your primary residence, and you may want to speak to a tax adviser on how this could affect you.

But for most, cash-flow is key. And for that reason lowering the overall interest rate of the loan is a game-changer for most homeowners considering refinancing. However, there can be cases where refinancing can lower the overall monthly payment without reducing the interest rate of the loan.

A good example of that would be if you currently had an FHA loan with mortgage insurance. If you qualified to refinance your loan with a conventional mortgage you could potentially remove the PMI requirement. In that case you may pay a higher interest rate, but the removal of PMI should reduce your overall monthly payment.